Queenstown Lakes Mayor Jim Boult told Mountain Scene last month the impact of Covid-19 meant the district council had to "park it up".
He confirmed that to the Otago Daily Times yesterday, saying "the last thing in the world the accommodation sector needs is another cost".
The proposal had been poised to be introduced to Parliament as a Bill, and the district council had hoped it would be passed before this year’s general election.
"The reality is now we’re in a different world than we were three, six, 12 months ago, when it made perfect sense."
The levy’s biggest critic, Queenstown hotelier Nik Kiddle, said the district’s accommodation sector was facing "zero or close-to-zero" revenue for the foreseeable future, and he was relieved Mr Boult understood the sector’s predicament.
But he wanted the council to go further and "bury" the visitor levy for good.
"We want to see something definitive from the council, that gives us much clearer confidence in the future."
The levy received Government backing after a non-binding referendum last year.
Set at 5%, it was to be introduced some time after July 1 next year, and forecast to raise $22.5 million annually.
Mr Kiddle, who set up the Lakes District Tax Equity Group to fight the levy, said the group had morphed into Lakes District Accommodation Sector, which would lobby on all issues affecting the industry.
It planned to make a submission this week on the council’s proposed annual plan calling for a rates freeze.
Mr Boult told an online meeting last week the average rates increase of nearly 7% proposed for the coming financial year was "off the table", and he favoured an increase in line with inflation.
But Mr Kiddle said any rates rise could not be justified given the "devastation" the pandemic was causing to the district’s economy.
"If we don’t have any income, we can’t spend it."
